What are Based Applications?

Ethereum’s fragmentation issue has been a hot topic over the past two years, driven by the flurry of Ethereum Layer 2 launches that came alongside Ethereum’s rollup-centric roadmap.

The repeated introduction of new and incentivized Layer 2’s creates an oversaturation of available networks, and fragmentation of liquidity across the EVM ecosystem. In its current state there are 36 different L2’s with more than $1 million in cumulative value secured, and 17 with more than $100 million.

L2Beat

While multichain and omnichain infrastructure help solve the fragmentation issue, DVT and based applications offer a potentially more efficient and secure approach to the multichain economy.

SSV Network is a DVT (distributed validator technology) infrastructure and helps resolve some of the Ethereum validator’s pain points by making it more resilient to bugs and downtime.

A DVT network like SSV promotes validators' security, decentralization, and efficiency. This is done by introducing new levels of validator key security and active-active redundancy, which is a slashing-free and fault-tolerant process for keeping validators running consistently.

Based Applications

On Jan. 28, the SSV DAO announced a future vision by SSV Labs for the protocol - SSV 2.0, introducing the Based Application Protocol. Through the Based Application Protocol, validators can extend their security to anything not secured by Ethereum directly, providing a new bootstrapping paradigm and new yield opportunities for validators.

Based Applications (bApps) source their security directly from Ethereum validators, enabling use cases like pre-confirmations, based sequencing, and data availability, all of which can contribute to solving Ethereum’s fragmentation dilemma.

Based sequencing means that services or dApps utilize Ethereum validators to sequence their transactions before adding them to the blockchain. In a layer 2 heavy environment however, L2s are required to roll up transactions off-chain and send them to Ethereum for validation, also known as Based Rollups. When these transactions are sequenced on Ethereum Layer 1, network effects remain while mitigating fees, giving rise to the concept of based sequencing.

Pre-confirmations tackle the confirmation delay issue, where Ethereum validators can commit to adding transactions to the L1 for L2 chains. This transaction is handled via posting collateral as a contract to include a transaction in an upcoming block, and when pre-confirmed, the transaction latency can be improved to the order of 200ms.

bApps present the idea of validators that can secure out-of-protocol services such as oracles, bridges, or rollups, in order to unlock yield that doesn’t bear as much risk as current restaking models. With these activations, validators can be conceptualized as an asset class themselves.

Implementing bApps also may eradicate some of the existing bootstrapping security pitfalls such as jeopardizing withdrawal keys and cascading risks, but implement a “risk expressive model” which still allows stakers to opt-in to new services on Ethereum with their validator’s non-slashable capital. This creates a risk-mitigated, but efficient environment with a low barrier to entry. 

Based-Applications Chain

Currently, SSV relies on Ethereum as a coordination layer for settlement, however reliance on Ethereum presents a few limitations like scale and cost.

bApp transactions are data-dense transactions that are required to be posted as calldata. However, Ethereum maintains calldata limitations that hinder bApp scalability. This heavy calldata requirement also results in extremely high gas costs, which are already an issue to begin with Ethereum.

In order to solve these issues and create a more scalable ecosystem, SSV plans to develop a bApp chain. The bApp chain (a bApp itself) would encapsulate the current DVT operations on SSV Network, and be built for scalability and data demands from future bApp development. The bApp chain would be designed in order to act as a hub for multi-chain validators to secure based applications, and enable the extension of bApps across other L1 ecosystems.

SSV2.0 development looks to further application capabilities across multiple chains, and potentially help solve Ethereum’s fragmentation issue with a unified based-application layer through the bApp chain. Meanwhile, SSV 2.0 drives the validator’s transition from a one-dimensional part of the ecosystem, into a focal point for the based economy.